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Employment Law

Legal guidance - compliance - software

Veale Wasborough Vizards , 16 NOV 2015

Drawing an inference - the importance of engaging with the tribunal process

Drawing an inference - the importance of engaging with the tribunal process
Mark Stevens
Associate, Veale Wasbrough Vizards

The Employment Appeal Tribunal (EAT) has upheld a tribunal's decision to draw an inference about the legal control over a company where insufficient evidence was provided by the respondent.

Background

From June 2011, Mr Jones was employed as an estate maintenance worker by Culden Faw Limited (the Company), a wholly owned subsidiary of Hambleden Estate Inc, a company incorporated in the British Virgin Islands which was in turn wholly owned by Black Bear Holdings SA. The ultimate owners of this company were unclear.

On 31 May 2013, Mr Hones was dismissed by the Company and er-employed directly by Mr and Mrs Schwarzenbach on the subsequent working day. When he was subsequently dismissed on 6 January 2014, he sought to bring a claim for unfair dismissal.

Needing two years' service in which to do so, Mr Jones argued that his continuity of employment at the Company should be counted together with his service for Mr and Mrs Schwarzenbach as they were two 'associated' employers. He argued that as Mr and Mrs Scharzenbach had 'indirect control' of the Company, they were associated with it.

The test of whether two employers are 'associated' turns on whether:

  • one is a company of which the other (directly or indirectly) has control, or
  • both are companies of which a third person (directly or indirectly) has control
The Schwarzenbachs did not attend the Employment Tribunal (ET) and gave limited evidence on the ownership of the Company. The ET held that the Company and Mr and Mrs Schwarzenbach were associated companies under this definition and therefore that Mr Jones had established the requisite two years' continuous employment to bring his unfair dismissal claim.

In their reasoning, the ET held that there was a presumption in favour of continuity of service unless the employers could prove that they were not associated.

The EAT's decision

In dismissing the Schwarzenbach's appeal, the EAT accepted that the ET had erred in relying on the ERA presumption of continuity of employment. In fact, this presumption does not apply where an employee is seeking to establish continuity across two employers.

The EAT, however, was satisfied that the tribunal's conclusions had been based upon permissible findings of fact and despite Mr Jones having the burden of proving his employers were associated, the Employment Judge was entitled to draw inferences from the fact that Mr and Mrs Schwarzenbach had not produced sufficient evidence to prove ownership of the Company.

Furthermore, the EAT was unimpressed by the Schwarzwenbach's refusal to engage throughout the tribunal proceedings and the lack of transparent evidence provided as to where ultimate legal control of the Company vested. It therefore held that in the absence of such evidence, the ET was entitled to draw an inference based on the surrounding facts.

Best practice

This decision could have been different had the Schwarzenbachs provided more evidence as to who had legal control over the Company. Mr Jones was able to establish a case that his employers were associated as a result of the ET drawing an inference from the Schwarzenbach's unwillingness to give evidence. This illustrates the importance for an employer to prepare for an engage with the employment tribunal process.

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